Douglas Equipment v. EQT Production Company

CourtSuperior Court of Pennsylvania
DecidedAugust 15, 2023
Docket674 WDA 2022
StatusUnpublished

This text of Douglas Equipment v. EQT Production Company (Douglas Equipment v. EQT Production Company) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Douglas Equipment v. EQT Production Company, (Pa. Ct. App. 2023).

Opinion

J-A11006-23

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

DOUGLAS EQUIPTMENT, INC.; : IN THE SUPERIOR COURT OF DOUGLAS ENERGY, LLP; FIRST : PENNSYLVANIA BAPTIST CHURCH OF WAYNESBURG; : D & W RESOURCES, LP; AMY LYNNE : MENDICINO AND MARK MENDICINO : : Appellants : : v. : No. 674 WDA 2022 : EQT PRODUCTION COMPANY; GARY : N. LEE; DEBORAH H. CAMPBELL AND : MARY H. ULAM, ADMINISTRATRICES, : D.B.N.C.T.A OF THE ESTATE OF : WILLIAM E. HOLT, DECEASED; : DEBORAH H. CAMPBELL AND MARY : H. ULAM, EXECUTRICES OF THE : ESTATE OF NIRA W. HOLT, : DECEASED; ROBERT E. LEE AND : MICHELLE LEE, HUSBAND AND WIFE, : ROBERT LEE 2015 IRREVOCABLE : TRUST; AND RICE DRILLING B LLC : : Appellees :

Appeal from the Order Entered May 10, 2022 In the Court of Common Pleas of Greene County Civil Division at No: AD No. 77-2017

BEFORE: BENDER, P.J.E., STABILE, J., and PELLEGRINI, J.*

MEMORANDUM BY STABILE, J.: FILED: AUGUST 15, 2023

Appellants (collectively “Douglas Appellants”) appeal from the May 10,

2022 order entered in the Court of Common Pleas of Greene County granting

summary judgment in favor of Appellees (collectively “EQT Appellees”) and

____________________________________________

* Retired Senior Judge assigned to the Superior Court. J-A11006-23

denying the Douglas Appellants’ motion seeking summary judgment against

the EQT Appellees.1 The Douglas Appellants contend that the trial court erred

in finding their oil and gas lease invalid and in finding the EQT Appellees’ oil

and gas lease valid. After careful review, we affirm.

In many oil and gas lease cases, the factual history is lengthy and rather

convoluted. This case is no exception. However, the parties do not suggest

that any genuine issues of material fact are at issue here. We offer the

following abridged version of facts pertinent to our review of the legal issues

before us.

By deed dated August 31, 1972, the property in question (approximately

321 acres, referred to herein as “the Subject Land”) located in Gilmore

Township, Greene County, was conveyed to J.K. Willison and his wife,

Wynona, and to J. Kenneth Willison, Jr., and his wife, Sherry. The conveyance

included all oil and gas rights for the property. On August 12, 1987, J.K. and

Wynona Willison conveyed their undivided one-half interest in the property to

1 The Douglas Appellants include Douglas Equipment, Inc.; Douglas Energy,

LLP; First Baptist Church of Waynesburg; D&W Resources, LP; Amy Lynne Mendicino; and Mark Mendicino. The EQT Appellees include EQT Production Company; Gary N. Lee; Deborah H. Campbell and Mary H. Ulam, as Administratrices, D.B.N.C.T.A., of the Estate of William E. Holt, Deceased, and as Executrices of the Estate of Nira W. Holt; Robert E. Lee and Michelle Lee, husband and wife; Robert Lee 2015 Irrevocable Trust’ and Rice Drilling B LLC. The roles of the parties will be discussed as pertinent to the matters raised in this appeal. We note that Rice Drilling was dismissed from the action by agreement of the parties, see Trial Court Order, 5/10/22, at ¶1, and is not a party to this appeal, despite its name appearing in the caption.

-2- J-A11006-23

J.K., Jr., and Sherry Willison (hereinafter “the Willisons”). Again, the

conveyance included oil and gas rights.

On October 3, 1994, the Willisons entered into a lease with Douglas

Equipment covering the property (“the Douglas Lease”). At that time, one

vertical well was located on the property. Its operator transferred the well to

Douglas Equipment in May 1995. See Deposition of Douglas Galbraith,

12/17/20, at 51; Reproduced Record (“R.R.”) 611a. As will be discussed

herein, the last production from the well occurred in October 2008. Id. at 54;

R.R. 612a.

The Douglas Lease, which was not recorded initially,2 leased the land to

Douglas Equipment “for the purpose of exploring and operating for and

producing and saving oil and gas.” Douglas Lease, 10/3/94, at ¶ 1; R.R. 97a.

A provision set forth the duration of the lease as follows:

3. DURATION OF LEASE – To have and to hold the said land and privileges for the said purposes for and during a period of 1 (one) year from date of signing and as long after commencement of operations on said land, or any portion thereof[,] . . . is operated for the exploration or production of gas or oil, or as gas or oil is found in paying quantities thereon[.] The Lessee shall have the right to shut-in any and all wells on said land on payment of a shut-in royalty as hereinafter set forth for a period up to three (3) years. Lessee has the further right to re- enter the lease following termination of the lease in order to plug any and all wells, reclaim the surface and comply with all applicable laws.

2 The lease was eventually recorded in 2009, as an exhibit to a document that

purported to ratify the Douglas Lease.

-3- J-A11006-23

Douglas Lease, 10/3/94 at ¶ 3; R.R. 98 (emphasis added).3 The lease also

included terms for production royalties to be paid to the Willisons for

petroleum oil found and saved, and for each well that produced gas marketed

by Douglas. Id. at ¶ 5; R.R. 99-100. Further, the lease provided for annual

payments of $250 for up to three years as the shut-in royalty for wells no

longer profitable to operate. Id. at ¶ 7; R.R. 100-01.

On July 26, 1999, while the Douglas Lease was in full force and effect,

the Willisons conveyed the Subject Land by general warranty deed (“1999

Deed”) to William E. and Nira W. Holt (undivided one-half interest) and Robert

Lee (undivided one-half interest) (together “Holts/Lee” or “the Holts and

Lee”). The 1999 Deed included five exceptions, two of which related to veins

of coal “within and underlying” the land, and two of which related to smaller

tracts of land previously conveyed by the Willisons. The final exception was

not for coal or other mineral rights or for tracts of land but rather was for “all

rights, title, and interest” in the Douglas Lease, except for the lease’s free gas

privilege for the personal use of the Holts/Lee purchasers. Deed, 7/26/99, at

2; R.R. 52a. (“Douglas Lease Exception”). Importantly, the 1999 Deed

conveyed the Subject Lands to the Holts and Lee,

TOGETHER with all and singular the rights, liberties, privileges, hereditaments, and appurtenances, whatsoever thereunto belonging, or in any wise appertaining, and the reversions and remainders, rents, issues, and profits thereof, and also, all the ____________________________________________

3 Because this case does not involve any claims relating to storage of gas, we

have redacted the lease provisions addressing storage on the land.

-4- J-A11006-23

estate, right, title, interest, property, claim, and demand whatsoever, of them, the said Grantors in law, or equity, or otherwise howsoever, of, in, to, or out of the same.

TO HAVE AND TO HOLD the premises hereby granted, or mentioned, or intended to be, with the appurtenances, unto the said Grantees, their heirs and assigns[.]

Id. at 3; R.R. 53a (emphasis added).

As the trial court recounted, the Willisons and Douglas Equipment

entered into a “farmout agreement” in 2006 and as well as an exploration

agreement in 2009 with other entities. Both agreements included expiration

provisions that would kick in if no drilling took place within specified periods

of time. Both of those agreements terminated under those terms without any

drilling having occurred. Trial Court Opinion, 5/10/22, at 6-7.

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